The Nigerian stock exchange, coupled with the ongoing pressures on banks to shore up their capital base, has brought to the forefront the challenges faced by investors, prompting prominent figures like Pastor Matthew Ashimolowo to speak out on the risks of investing in bank shares. The volatility of the Nigerian financial market has led to significant losses for many, including Ashimolowo, who has candidly shared his experiences of navigating the unpredictable waters of stock investments.
Ashimolowo’s reflections highlight the precarious nature of banking stocks in Nigeria, where the need for banks to maintain and increase their capital base often leads to fluctuations in stock prices, impacting investors. His personal journey serves as a cautionary tale for others considering similar investments.
“I would mention banks, there’s nothing they can do,” Ashimolowo stated, recounting his experience with First Bank shares, which he purchased for 36 Naira each, totaling 36 million Naira. The stock later plummeted to 12 Naira, resulting in a substantial loss. His narrative underscores the broader issue facing Nigerian banks as they strive to meet regulatory requirements and sustain investor confidence in an often unstable market environment.
In another instance, Ashimolowo borrowed 60 million Naira from Sterling Bank in 2005 or 2006 to invest in Skye Bank shares. Unfortunately, the shares dropped from 14 Naira to a mere 2.50 Naira, effectively wiping out his investment. The aftermath was swift and severe, with Sterling Bank sending four policemen to his office to demand repayment.
The pressure on banks to stabilize their financial footing has led to aggressive measures to recover debts, as evidenced by Ashimolowo’s encounters. This includes a visit from Skye Bank’s risk manager and a team of staff members to his church service, following a loan for a house-building project.
Ashimolowo’s experience with GTB shares, which he bought for approximately 18 Naira only to see them fall to 3.60 Naira, further illustrates the challenges investors face in the Nigerian banking sector. These stories reflect the broader risks associated with investing in a market where banking institutions are under constant pressure to shore up their capital base, often leading to significant financial losses for shareholders.
As the Nigerian banking sector continues to evolve, Ashimolowo’s candid reflections serve as a vital reminder of the inherent risks in stock investments, particularly in an environment where banks are grappling with capital adequacy challenges. His experiences offer valuable insights for current and potential investors, highlighting the need for caution and due diligence in navigating the complex landscape of Nigerian banking stocks.
